How to Find an Investor: A Guide For Business Capital How to Find an Investor: A Guide For Business Capital

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Finding investors is crucial to your business growth and stability. Whether you need funds to start your business, working capital to finance your day-to-day operations, or additional financing to purchase assets or expand your operations, investors help keep the business afloat and support the achievement of long-term goals. Most businesses do not make it past the 10th year, with almost half not surviving the fifth year. In addition, as many as 20% of new businesses fail within the first year. Though there are several reasons why new businesses fail, such as choosing the wrong location, expanding too fast, and poor market research, lack of financing remains a major challenge for both new and growing ventures.

Finding an investor allows you to overcome financial challenges and focus on growing your business with lesser limitations. In this post, we show you how to find business investors and form collaborations that fast-track the achievement of your short-term and long-term goals.

What Is an Investor?

An investor is an entity (individual or company) that puts money into your business with the expectation of receiving returns. Some investors may commit funds to your business in exchange for part ownership, which gives them some control over decisions or operations. They mainly fall into three categories: pre-investors, passive investors, and active investors.

Pre-investors are non-professional financiers such as family and friends. Passive investors only commit their money but do not actively engage in managing the business, such as angel investors. On the other hand, active investors are involved in running the business like venture capitalists.

Generally, there are many financiers to choose from, depending on your preferences. But before we discuss how to find the right ones for your business, let's first understand the types of investors that exist.

Types of Investors

Whether you want to start a business, finance working capital, purchase an asset, launch a new product, or expand operations, there are several types of investors you can consider to fundraise your project. Some of the most common are venture capitalists, angel investors, personal investors, crowdfunding platforms, and corporate lenders.

Venture capitalists

Venture capitalists are private equity investors who commit funds to early-stage companies with high growth potential. They usually fund the businesses in exchange for an equity stake. In addition, they may take up roles in company management or as board members. Some of the qualities they're mostly drawn to include businesses with a large potential market, strong management team, or a unique product/service with a high competitive advantage. Generally, they conduct extensive due diligence before deciding to invest.

Angel investors

An angel investor is a high-net-worth individual who funds startups and small businesses. Like venture capitalists, angel investors provide the funds in exchange for a share in the company. Usually, they have a personal interest in the vision or purpose of the company, and may provide funds either once or on an ongoing basis. But they're silent (passive) investors who do not engage in business management.

Personal investors

Personal investors are a common source of business financing, especially for startups. These are not professional investors but mainly family and friends who chip in to support your dreams and help with your cash flow issues. While entering a legal agreement may be unnecessary, signing a promissory note to spell out the terms of the loan is always advisable and a safeguard against ruining the relationship.

Crowdfunding platforms

Crowdfunding platforms eliminate traditional middlemen like banks, allowing businesses to access funds directly from individuals. This usually occurs on online platforms specifically designed to help entrepreneurs access many individual investors or peer-to-peer lenders. Once you create a profile on the website, you then share your business pitch to be considered for funding. Generally, a peer-to-peer lender is more of a creditor than an investor, as you will be expected to repay the money plus interest instead of sharing profits. However, there are other crowdfunding arrangements whereby a potential investor commits funds to your business in exchange for a product or a share of the earnings.

Corporate Investors

Some corporations invest in startups mainly to expand their portfolios. While their goal is to generate additional revenue initially, any incremental investment into your business increases their stake, giving them more control. Hence, this might be the least attractive investor to consider if you plan to retain control over your business in the long run.

Family Offices

Family offices are privately held companies that handle investment management and wealth management for wealthy families, generally one with at least $50-$100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations. The company's financial capital is the family's own wealth.

Ways of Finding an Investor

Fundraising is an ongoing exercise in every business, whether a startup or established. Even a company operating profitably requires additional cash injections from time to time for smooth operations and growth. There are different approaches you can take to find an investor whenever you need additional capital. Here are the tips to help you fundraise successfully.

Have a Clear Business Plan

Lacking a clear business plan is one of the reasons businesses fail. Investors want assurance they're investing their money in viable businesses, and one of the things they assess to reach this decision is your business plan. A clear and realistic business plan that outlines your goals and how you plan to achieve them is vital when searching for investors. It can play a huge role in enticing potential investors to fund you, as they're especially interested in a business with impressive growth potential.

Talk to Family and Friends

Sometimes your family and friends may be willing to support your business ideas; it never hurts to ask. Should they agree to fund you, it's prudent to handle it carefully to avoid ruining the relationship. For instance, you may want to consider writing an informal agreement, like a promissory note, outlining the terms of the facility. Some might even be interested in partnering with you in the business, in which case, you need to draft a partnership agreement. However, even if they do not invest in the business, talking to them may still be helpful as they can recommend or vouch for you to investors.

Use Social Media

Social media presents an excellent opportunity to find and connect with investors who might be interested in your business. With the extensive social media penetration globally and regionally, the chances of landing financiers on social platforms are pretty high. You can connect with investors on the platforms by reaching out to them with funding requests or optimizing your profile to get discovered by those looking for companies to finance. Some of them often identify themselves as VC firms or angel investors on social sites, making it easier to search and find them. By configuring parameters within Relatus’s platform properly you’ll be able to take advantage of these important hooks to find the people that are already looking for you.

Attend Industry Events

Industry events and summits provide excellent avenues for entrepreneurs to network and meet potential investors looking for investment opportunities. Stay on top of your industry news to learn of events and conferences you can attend either online or in person. Here you could meet the investors or network with fellow entrepreneurs who can introduce you to investors. It would help to research who is attending the events in advance and try to schedule meetings if possible.

Stay in Touch with Your Community

Community groups and associations also provide an avenue to connect with entrepreneurs and individuals who may introduce you to investors. In addition, link up with local business schools. These institutions often organize workshops and invite speakers who are industry experts. Find out if they would be willing to set up an introduction with the guest speakers on your behalf.

Explore Crowdfunding Opportunities

There are several crowdfunding opportunities you can explore to raise funds for your business. For instance, there are reward-based crowdfunding platforms where the investors contribute a certain amount of money in exchange for a product, debt-based crowdfunding that involves peer-to-peer lending, or equity crowdfunding, where the investors commit money into the business in exchange for a share of the profits. Depending on your funding needs, you can research online to find appropriate fundraising platforms to fund your business.

Email Investors

Email remains a highly potent means to pitch potential investors, both those you have met and haven't met yet. Take time and build a list of relevant contacts who may be interested in investing in your business. Then using custom email templates for guidance, pitch them and make sure to follow up. Check the email examples shared in this article for inspiration. We designed Relatus to help you identify which investors will be most likely to want to hear about your business.

Apply to Accelerators

Applying to an accelerator program is another great way of landing investors. Once accepted, you gain access to business advice and resources to finance your operations. The program also opens up your business for introductions to more investors, positioning it for both short-term and long-term success.

Engage Your Network

Getting in contact with 2nd-degree contacts can be of great value. Even from the weakest of ties, there can be a solid foothold where a connection can be made. By getting in contact with folks that aren’t first-hand contacts that you’ve already met, you might quickly find that you’ve gained access to an entirely new pool of individuals that are interested in your vision.

What to Look for in an Investor

Finding an investor for your business is a remarkable milestone, especially considering the hundreds of other entrepreneurs seeking to partner with them. However, not every investor willing to invest the dollars is right for your company.

At the end of the day, the financier will have a significant influence on your business; hence it's vital you find the right match. Before you reach out to or seal the deal with a potential investor, here are some factors to consider.

Industry experience

Find the track record of the investor. Do they have experience in your industry? Have they helped grow other startups? In-depth industry knowledge or expertise running similar startups successfully makes them invaluable. You are confident they can provide the guidance to help build your business.


The investor should be trustworthy. As they will be accessing confidential business information once they start partnering with you, you should trust them not to use it against you.


The investor should be a rational risk taker, able to take calculated risks not based on emotions. They should understand and be able to tolerate the risk involved in investing in your business.


It's only natural that once the investor commits their money, they desire to see the business grow to start reaping the returns. But as much as you need to focus on growth, scaling too fast can hurt the company. Actually, it's one of the reasons startups fail. So the investor should understand this and have clear expectations for short-term and long-term business growth prospects.

Pros and Cons of Investors

Having understood the various types of business investors, how to find them, and what to look for in them, you might now be ready to go out and start fundraising. But before you do so, here are some of the pros and cons of investors you need to know.

Pros of investors

  • More affordable than taking a loan
  • Access to investor expertise
  • Fewer legal risks than debt-financing
  • No repayment is required since it's not a loan
  • It does not require a credit history

Cons of investors

  • Loss of some control
  • Slowed decision making
  • Reduced earnings
  • Higher stakes

Generally, financing your business, whether through investor funding or debt, has its benefits and downsides. Investor funding wins over debt financing because you can find investors even when your business might not qualify for loans. Financiers also bring in-depth industry expertise into the company, which can catapult your growth. But as we have illustrated above, inviting investors to partner with you also has notable downsides you should factor in in order to lay out a clear investment plan that protects your business interests.

Start the Journey to Finding Your Business Investor Now

Finding an investor to partner with is an exciting milestone for any entrepreneur. They bring in the much-needed cash injection to finance business activities and projects, enabling you to operate competitively and reach growth milestones with fewer financial limitations. You also benefit from their industry expertise, giving you an edge over similar ventures. However, fundraising is a challenging process; one reason being there are many entrepreneurs competing for limited resources.

As you draft your fundraising strategies, consider the tips we have shared above to increase your chances of landing a suitable investor. Also, keep in mind the factors you need to consider when choosing a financier to find an ideal one. Lastly, check out the Relatus platform and register for Preview Access to reveal qualified potential investors in your own network.